What do you need and why do you need it?
Pricing, payment procedures, service performance standards and consequences of late payments; these are just a small number of particulars that need to be addressed when a business to business (“B2B”) relationship commences. These necessary terms in business can make the biggest difference if/when the unexpected happens. One of the biggest problems businesses face when a business relationship takes a turn for the worst is that the terms the parties have agreed are either unclear and ambiguous or aren’t even in existence at all. Both businesses are then left in a vulnerable and impossible position when it comes to redress.
Failure to adequately plan for all potential scenarios at the outset of a business relationship can often lead to expensive and time consuming legal disputes. This puts companies under an unnecessary financial strain, the burden of which some companies cannot afford to bear. The end and the outcome of a B2B dispute is often dictated by the beginning. Seeking adequate legal advice with the necessary documents being drawn up thereafter will protect you from costly legal battles and expense that’s easily avoided.
It is essential for all businesses to have Terms of Business drafted and in place before commencing their trade, affording them the protection they need from day one. Without written Terms of Business there is no certainty. Oral contracts (although enforceable) are often not given as much weight as a written contract; certain terms are often forgotten or overlooked, or there may be such a long passage of time between the agreement and the dispute that neither party can remember exactly what was said or agreed.
Terms of Business are also useful when it comes to enforcing the terms of the contract. It will be clear to either party if a breach of the terms has occurred because it’s in writing. Similarly, Terms of Business can also help your business consistently deliver exceptional service to your clients/customers, for example when service level agreements are agreed.
To protect yourself and your business, you ought to make sure that you are managing the expectations of those you do business with. If there are timescales you have to work within or deadlines you have to meet, address this within your Terms of Business and each party knows where they stand. Similarly, should you or your client/customer need to comply with any legal obligation or legislation, the Terms of Business is the perfect forum to address and confirm compliance with the same.
A consideration that business owners don’t often consider at company incorporation stage is that, you may at some point in the future like to sell your business on, with your clients and customers in tow. You can make your business a lot more attractive to any potential buyers if you have strong terms in place with your clients, thus reducing the risk of unnecessary expense and timely legal disputes for the buyer should you not agree to indemnify them moving forwards.
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Director and Chartered Legal Executive
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Michael Lewin Solicitors are experts in both corporate and commercial drafting. We offer our services on a fixed fee basis and offer impartial advice on the best way forward for your business in light of the information you provide us with. To discuss this further with a member of our team, please email RichardCoulthard@michaellewin.co.uk or telephone 0113 200 9730.